CENTER BANCORP INC, DEF 14A, 1999-03-10

CENTER BANCORP INC
DEF 14A, 1999-03-10
STATE COMMERCIAL BANKS

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SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. __)

Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]

Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to ss.240.14a-11(c) or ss.240.14a-12

CENTER BANCORP, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

[X] No fee required.

[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.

(1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
(5) Total fee paid:
----------------------------------------------------------------------

[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11 (a) (2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.

(1) Amount Previously Paid:
--------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>

CENTER BANCORP, INC.

Corporate Headquarters
2455 Morris Avenue
Union, New Jersey 07083

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD APRIL 13, 1999

To Our Shareholders:

The Annual Meeting of Shareholders of Center Bancorp, Inc. (the
"Corporation") will be held at the Suburban Golf Club, 1730 Morris Avenue,
Union, New Jersey on April 13, 199( at 7:00 p.m., for the following purposes:

1. To elect three Class 3 directors, whose three year terms will expire
in 2002.

2. To vote upon a proposal to adopt the Center Bancorp 1999 Employee
Stock Incentive Plan.

3. To transact such other business as may properly come before the
Annual Meeting.

Only shareholders of record of the Corporation at the close of
business on February 26, 1999 shall be entitled to notice of and to vote at the
Annual Meeting. Each share of the Corporation's Common Stock is entitled to one
vote.

Please complete, sign, date and return the accompanying proxy in the
enclosed postage paid envelope at your earliest convenience.

You are cordially invited to attend the Meeting.

By Order of the Board of Directors

John J. Davis
President and
Chief Executive Officer

Dated: March 12, 1999

<PAGE>

CENTER BANCORP, INC.
2455 Morris Avenue, Union, New Jersey 07083

PROXY STATEMENT

This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of Center Bancorp, Inc. (the "Corporation") of proxies
to be used at the annual meeting of the shareholders of the Corporation to be
held at the Suburban Golf Club, 1730 Morris Avenue, Union, New Jersey at 7:00
p.m. on April 13, 1999, and any adjournments thereof (the "Annual Meeting").
Copies of this Proxy Statement and the enclosed form of proxy are first being
sent to shareholders on or about March 12, 1999.

Only shareholders of record at the close of business on February 26,
1999 (the "Record Date") will be entitled to receive notice of and to vote at
the Annual Meeting. Each share is entitled to one vote on each matter to be
voted on at the Annual Meeting.

On the Record Date, there were 3,584,841 shares of common stock, no
par value (the "Common Stock"), outstanding. An additional 450,488 shares are
held by the Corporation as treasury stock.

Any shareholder who executes the proxy referred to in this Proxy
Statement may revoke such proxy at any time before it is exercised, but
revocation is not effective unless a later dated signed proxy is submitted to
the Corporation prior to the Annual Meeting, written notice of revocation is
filed with the Secretary of the Corporation either prior to the Annual Meeting
or while the Annual Meeting is in progress but prior to the voting of such proxy
or the shares subject to such proxy are voted by written ballot at the Annual
Meeting.

All proxies properly executed and not revoked will be voted as
specified. If a proxy is signed but no specification is given, the proxy will be
voted in favor of the Board's nominees and in favor of the proposal to adopt the
Center Bancorp 1999 Employee Stock Incentive Plan.

The cost of soliciting proxies shall be borne by the Corporation. In
addition to the solicitation of proxies by use of the mails, officers and
employees of the Corporation and/or its subsidiary may solicit proxies by
telephone, telegraph or personal interview, with nominal expense to the
Corporation. The Corporation will also pay the standard charges and expenses of
brokerage houses or other nominees or fiduciaries for forwarding proxy
soliciting material to the beneficial owners of shares.

The presence in person or by proxy of holders of a majority of the
outstanding shares of Common Stock will constitute a quorum for the transaction
of business at the Annual Meeting. The election of directors will require the
affirmative vote of a plurality of the Common Stock represented and entitled to
vote at the Annual Meeting. All other matters submitted to shareholders at the
Annual Meeting will require the affirmative vote of a majority of the votes cast
at the Annual Meeting by shareholders represented and entitled to vote at the
Annual Meeting. For purposes of determining the votes cast with respect to any

<PAGE>

matter presented for consideration at the Annual Meeting, only those votes cast
"for" or "against" will be counted. Abstentions and broker non-votes will be
counted only for the purpose of determining whether a quorum is present at the
Annual Meeting.

Election of Directors

The By-Laws provide that the Board of Directors shall consist of not
less than five nor more than twenty-five members, the exact number to be fixed
and determined from time to time by resolution of the full Board of Directors or
by resolution of the shareholders at any annual or special meeting. The Board of
Directors has set the number of Directors to be eleven. The Corporation's
Certificate of Incorporation provides that the Directors shall be divided into
three classes, as nearly equal in number as possible, with each class elected on
a staggered term basis, normally for a period of three years. Shorter terms are
permitted when necessary in order to equalize the size of the classes. At the
upcoming Annual Meeting, three directors in Class 3 will be elected for a three
year term. The terms of the remaining directors in Class 1 and Class 2 will
continue until 2001 and 2000, respectively.

It is intended that the proxies solicited hereunder will be voted FOR
(unless otherwise directed) the election of Robert L. Bischoff, Paul Lomakin,
Jr. and Herbert Schiller for three year terms. The Corporation does not
contemplate that any nominee will be unable to serve as a director for any
reason. Each nominee has agreed to serve if elected. However, in the event that
one or more of the nominees should be unable to stand for election,
discretionary authority is reserved to cast votes for the election of a
substitute or substitutes selected by the Board of Directors and all proxies
eligible to be voted for the Board's nominees will be voted for such other
person or persons. Each of the nominees are currently members of the Board of
Directors of the Corporation and its subsidiary, Union Center National Bank (the
"Bank").

Each of the members of the Board of Directors of the Corporation
(collectively, the "Directors") has served in their current occupations for at
least the past five years. The Directors, as of February 1, 1999, according to
information supplied by them, owned beneficially, directly or indirectly, the
number of shares of Common Stock set forth opposite their respective names
below. The Directors have served continuously as such since the dates when they
first became Directors as set forth herein. The date appearing in parentheses
opposite each director's name in the "Director Since" column below represents
the year in which such Director became a director of the Bank. Each such
Director presently serves as a Director of the Bank.

<PAGE>

CLASS - 1 The following table sets forth certain information with respect
to each Director in Class 1. Each member of Class 1 has a term that
will continue until 2001.

Number of
Shares of
Common Stock
Held
Beneficially Percent of
Director Directly and Outstanding Other
Name Occupation Age Since Indirectly Shares Directorships
---- ---------- --- ----- ---------- ------ -------------

<S> <C> <C> <C> <C>
John J. Davis President and Chief 56 1982 46,930(a) 1.31 - -
Executive Officer (1982)
of the Corporation
and the Bank

Brenda Curtis Executive Director, 57 1995 12,373(b) .35 - -
American Cancer (1995)
Society, Union
County Unit

Donald G. Kein Partner, Kein, 61 1982 74,138(c) 2.07 - -
Pollatschek & (1970)
Greenstein
(Attorneys)

Charles P. Chairman of the 75 1982 35,070(d) .98 - -
Woodward Board of the (1970)
Corporation and
the Bank

</TABLE>

- ----------------

(a) Direct-----------46,636
Indirect------------294 (jointly with wife and children)

(b) Direct-----------12,349

(d) Direct-----------35,070

<PAGE>

CLASS - 2 The following table sets forth certain information with respect to
each Director in Class 2. Each member of Class 2 has a term that will continue
until 2000.

<S> <C> <C> <C> <C> <C> <C>
Hugo Barth, III Partner, Haeberle & 56 1982 39,379(a) 1.10 - -
Barth (Funeral (1977)
Director)

Alexander A. Bol Owner, Alexander- 51 1994 21,090(b) .59 - -
A. Bol A.I.A. (1994)
(Architectural Firm)

Stanley R. Sommer Retired; formerly 77 1982 20,730(c) .58 - -
President, Sommer, (1972)
Inc. (Retail
Clothing)

William A. Thompson Vice President, 41 1994 19,345(d) .54 - -
Thompson & Co. (1994)
(Auto Parts
Distributor)
</TABLE>

- --------------------

(a) Direct-----------34,654
Indirect----------4,725 (jointly with wife)

(b) Direct-----------21,090

(d) Direct-----------17,666
Indirect----------1,679 (wife)

<PAGE>

CLASS 3 - The following table sets forth certain information with respect
to the Directors in Class 3 (each of whom has been nominated for a
three year term).

<S> <C> <C> <C> <C> <C>
Robert L. Bischoff President 59 1992 23,067(a) .64 --
Beer Import Co. (1992)

Paul Lomakin, Jr. President 72 1982 87,525(b) 2.44 --
Winthrop Dev. (1977)
(Builder)

Herbert Schiller President 63 1990 27,285(c) .76 --
Foremost Mfg. Co. (1990)
(Manufacturer)

</TABLE>

- ---------------------

(a) Direct-----------22,325
Indirect------------742 (wife)

(b) Direct-----------47,928
Indirect---------39,597 (wife and children)

(d) Direct-----------27,285

The shares set forth in the table above include the following number
of shares subject to options exercisable by April 1, 1999: Mr. Barth, 8,384
shares; Mr. Bischoff, 14,884 shares; Mr. Bol, 14,884 shares; Ms. Curtis, 9,624
shares; Mr. Davis, 12,748 shares; Mr. Kein, 14,884 shares; Mr. Lomakin, 14,884
shares; Mr. Schiller, 14,884 shares; Mr. Sommer, 7,442 shares; Mr. Thompson,
12,729 shares; and Mr. Woodward, 14,884 shares.

Anthony C. Weagley, the Company's Chief Financial Officer, beneficially
owned 11,474 shares of Common Stock as of February 1, 1999, including 4,962
shares subject to options exercisable by April 1, 1999. Donald Bennettii, a Vice
President of the Company, beneficially owned 1,573 shares of Common Stock as of
February 1, 1999, including 495 shares subject to options exercisable by April
1, 1999. As of February 1, 1999 the total number of shares directly and
beneficially owned by all Directors and executive officers of the Corporation

<PAGE>

(17 persons) amounted to 407,032 shares or 11.36% of the common shares
outstanding. In addition, as of February 1, 1999, the total number of shares
directly and beneficially owned by officers of the Bank (and not the
Corporation) amounted to 2,352 shares or .06% of the common shares outstanding.

There are no fees paid to any Director of the Corporation for any
meeting of the Board of Directors or its committees or committee meetings of the
Bank's Board of Directors. All directors of the Bank who are not officers of the
Bank receive a $7,000 annual retainer and $450 for each meeting of the Board of
Directors of the Bank attended. Pursuant to the Corporation's 1993 Outside
Director Stock Option Plan, each non-employee director has received a stock
option covering 14,884 shares of Common Stock. These options are exercisable in
three installments, commencing one year after the date of grant, at a per share
exercise price equal to the fair market value of one share of Common Stock on
the date of grant.

Effective July 1, 1998, the Board of Directors adopted the Union
Center National Bank Directors' Retirement Plan (the "Directors' Retirement
Plan"). Under the Directors' Retirement Plan, each non-employee director of the
Board who completes at least 15 years of service as a member of the Board
(including service on the Board prior to July 1, 1998), and who retires from the
Board on or after May 1, 2000 and after having attained age 70, will be paid an
annual retirement benefit of $8,500, payable monthly, commencing on his or her
date of retirement and continuing for 180 payments. In the event that a director
dies before receiving his or her entire benefit, the balance of such benefit
will continue to be paid to the director's surviving spouse until the earlier of
such spouse's death or the payment of all 180 such monthly installments. The
Directors' Retirement Plan is unfunded; that is, all benefits due thereunder are
payable from the Bank's general assets. The Bank may, however, establish a trust
or similar arrangement for the purpose of accumulating the amounts needed to
provide such benefits.

There is no family relationship, by blood, marriage or adoption,
between any of the foregoing Directors and any other officer, director or
employee of the Corporation or the Bank.

The Corporation has no standing nominating committee or compensation
committee of the Board of Directors. Matters within the jurisdiction of these
committees are considered by the entire Board of Directors of the Corporation.
The Board's Audit Committee consists of Mr. Bischoff, (Chairman), Ms. Curtis and
Messrs. Barth, Sommer, Thompson and Woodward. The Audit Committee has
responsibility for monitoring the Corporation's financial reporting systems,
reviewing the Corporation's financial statements and supervising the
relationship between the Corporation and its independent accountants. During
1998, the Audit Committee met four times and the Board of Directors met 13
times. All directors attended more than 75% of the Board and committee meetings
that they were required to attend.

<PAGE>

EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation

The following table sets forth, for the years ended December 31, 1996,
1997 and 1998, the annual and long-term compensation of the Corporation's Chief
Executive Officer and its other executive officers who had annual compensation
(salary plus bonus) of $100,000 or more during 1998.

<PAGE>

SUMMARY COMPENSATION TABLE

Long-Term
Compensation
------------
Annual Common Shares All
Name and Compensation Subject to Other
Principal Position Year Salary Bonus(A) Other (B) Options Granted Compensation(C)
------------------ ---- ------ ------ ------ --------------- ------------

<S> <C> <C> <C> <C> <C> <C>
John J. Davis 1998 $229,430 $ 50,000 $ 19,040 - $ 6,300
President and Chief 1997 222,116 0 20,023 - 6,000
Executive Officer 1996 209,071 50,445 19,221 - 5,450
of the Corporation
and the Bank

Anthony C. Weagley 1998 $104,944 $15,550 $ 12,015 - $ 2,913
Vice President and 1997 98,880 0 9,373 - 2,775
Treasurer of the 1996 89,640 10,625 6,741 - 2,250
Corporation and
Sr. Vice President and
Cashier of the Bank

Donald Bennetti 1998 94,029 14,500 10,512 - 293
Vice President of the 1997 89,430 0 8,611 - 1,560
Corporation and Senior Vice 1996 73,521 10,200 8,044 - 1,360
President of the Bank

</TABLE>

- -----------------
(A) The Corporation adopted the Achievement Incentive Plan (the "AIP"),
effective as of January 1, 1995. Incentive compensation was not payable
under the AIP with respect to performance during 1997.

(B) For Mr. Davis, represents the cost to the Corporation of supplying an
automobile to Mr. Davis ($16,078 in 1998, $15,975 in 1997 and $15,921 in
1996) and payments made on Mr. Davis' behalf with respect to his personal
use of a country club membership. For Mr. Weagley, represents the cost to
the Corporation of supplying an automobile to Mr. Weagley ($ 12,015 in
1998, $ 9,373 in 1997 and $6,741 in 1996). For Mr. Bennetti, represents
the cost to the Corporation of supplying an automobile to Mr. Bennetti
($10,512 in 1998, $8,611 in 1997 and $8,044 in 1996).

(C) Represents contributions made to the Corporation's 401(k) plan on behalf
of Messrs. Davis, Weagley and Bennetti, representing 50% of their
contributions up to 6% of gross compensation.

<PAGE>

Stock Options

No options were granted to Mr. Davis, Mr. Weagley or Mr. Bennetti (the
"Named Officers") during 1998. The following table provides data regarding the
options exercised by the Named Officers during 1998 (reflecting the number of
shares acquired and the difference between the value of the shares on the
exercise date and the option exercise price) and the number of shares covered by
both exercisable and non-exercisable stock options held by the Named Officers at
December 31, 1998. Also reported are the values for "in-the-money" options,
which represent the positive spread between the exercise price of the Named
Officers' options and $17.06, the average of the high bid price and low asked
price for the Common Stock on December 31, 1998.

AGGREGATE OPTIONS/SAR EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTIONS/SAR VALUES
<TABLE>
<CAPTION>

Number of Value of
securities underlying unexercised
unexercised in-the-money
options/SARs at options/SARs at
fiscal year-end fiscal year-end
(#) ($)
Shares
acquired on Value Exercisable/ Exercisable/
Name exercise (#) Realized ($) Unexercisable Unexercisable

<S> <C> <C> <C> <C> <C> <C>
John J. Davis 2,136 8,405 12,748/0 59,490/0
Anthony C. Weagley -- -- 4,962/0 23,156/0
Donald Bennetti 1,986 11,383 495/0 2,310/0

</TABLE>

Pension Plan

The Bank maintains a defined benefit pension plan (the "Pension Plan")
for the benefit of its eligible employees. Monthly normal retirement benefits
are computed at the rate of 44% of final average earnings, reduced
proportionately for the participant's credited benefit years less than 25.
"Final average earnings" is the average monthly W-2 compensation which is paid
to participants by the Bank during the last 60 calendar months of their credited
benefit service (essentially equivalent to "Salary" in the Summary Compensation
Table set forth above). The benefits shown are not subject to deduction for
Social Security or other offset amounts.

The following table sets forth the annual benefits which an eligible
employee would receive under the Pension Plan upon retirement at age 65 based on
the indicated assumptions as to average annual earnings and years of service.
The table also reflects benefits under the Corporation's Supplemental Executive
Retirement Plans, which became effective on January 1, 1995. The amounts shown
reflect a 10 year certain and life annuity benefit rather than the joint and 50%

<PAGE>

survivor annuity benefit required by the Employee Retirement Income Security Act
of 1974 as the normal form of benefit for a married employee. The number of
benefit years for Mr. Davis is 21, the number of benefit years for Mr. Weagley
is 12 and the number of benefit years for Mr. Bennetti is 8.

<PAGE>

Average Annual
Earnings for
60 Consecutive 10 15 20 25*
Months Prior Benefit Benefit Benefit Benefit
to Retirement Years Years Years Years
-------------- --------- -------- ------- --------
<S> <C> <C> <C> <C>

$ 40,000 7,040 10,560 $14,080 $17,600
60,000 10,560 15,840 21,120 26,400
80,000 14,080 21,120 28,160 35,200
100,000 17,600 26,400 35,200 44,000
120,000 21,120 31,680 42,240 52,800
140,000 24,640 36,690 49,280 61,600
150,000* 26,400 39,600 52,800 66,000

* Maximum

</TABLE>

Other Benefit Plans

During 1994, the Corporation implemented certain new employee benefit
plans, effective as of January 1, 1995, including two Supplemental Executive
Retirement Plans ("SERPS"). The SERPS, as well as a trust arrangement entered
into during 1997, are described below under the caption "Board Report on
Executive Compensation."

Employment Agreements

John J. Davis entered into an employment agreement with the
Corporation and the Bank, dated as of August 1, 1992. Effective September 1,
1995, the employment agreement was amended and restated in its entirety. As
amended, the employment agreement provides for Mr. Davis' employment as
President and Chief Executive Officer of the Corporation and the Bank for a term
that expires in 2000, subject to renewal provisions that, in effect, assure Mr.
Davis of at least three years' notice of termination in the absence of a "Change
in Control Event" (as defined) and five years' notice of termination in
connection with a Change in Control Event. Mr. Davis' salary rate currently is
$235,000 per annum. In subsequent years, Mr. Davis is to receive his salary for
the immediately preceding 12 month period plus such salary increment as shall be
determined by the Executive Compensation Committee of the Bank's Board of
Directors, with reference to the Bank's salary guide. The employment agreement
also provides that Mr. Davis will receive benefits and perquisites appropriate
to his position.

Mr. Davis has the right under the employment agreement to resign with
"Good Reason," which is defined in the agreement to include certain Change in
Control Events which, in turn, are defined as the acquisition by a third party
of a majority of the voting stock or substantially all of the assets of the
Corporation or the Bank or a change in the composition of the Board of Directors
such that a majority of the members of the Board as of the date of the agreement
no longer serve on the Board. Upon termination for Good Reason, the employment
agreement provides that Mr. Davis will be entitled to receive a severance
allowance equal to his regular compensation for the duration of the term of the

<PAGE>

agreement, an amount equal to the largest bonus received by Mr. Davis under the
AIP, multiplied by the number of years remaining in the term of his employment
agreement, benefits comparable to the benefits that Mr. Davis would have
received under certain benefit plans maintained by the Corporation and the Bank
and acceleration of all unvested stock options. Mr. Davis would be entitled to
comparable benefits if the Bank and the Corporation were to terminate his
employment without cause.

Anthony C. Weagley and Donald Bennetti entered into employment
agreements with the Corporation and the Bank, dated as of January 1, 1996. Mr.
Weagley's agreement provides for his employment as Senior Vice President and
Cashier of the Bank and Vice President and Treasurer of the Corporation for an
initial term that was completed on December 31, 1998, subject to renewal
provisions that, in effect, assure Mr. Weagley of at least two years' notice of
termination in the absence of a Change in Control Event and three years' notice
of termination in connection with a Change in Control Event. Mr. Bennetti's
agreement provides for his employment as a Vice President of the Bank for an
initial term that was completed on December 31, 1998, subject to renewal
provisions that, in effect, assure Mr. Bennetti of at least two years' notice of
termination in the absence of a Change in Control Event and three years' notice
of termination in connection with a Change in Control Event. Mr. Weagley's
salary rate currently is $104,000 per annum and Mr. Bennetti's salary rate
currently is $95,000. In subsequent years, Mr. Weagley and Mr. Bennetti are to
receive their salary for the immediately preceding 12 month period plus such
salary increment as shall be determined by the Executive Compensation Committee
of the Bank's Board of Directors, with reference to the Bank's salary guide. The
employment agreements also provide that Mr. Weagley and Mr. Bennetti will
receive certain benefits and perquisites appropriate to their positions.

Both Mr. Weagley and Mr. Bennetti have the right under their
employment agreements to resign with "Good Reason", which is defined in a manner
similar to the definition in Mr. Davis' contract. Upon termination for Good
Reason, the employment agreements provide that Mr. Weagley and Mr. Bennetti will
be entitled to receive a severance allowance equal to their regular compensation
for the duration of the term of the agreement, an amount equal to the largest
bonus received by them under the AIP, multiplied by the number of years
remaining in the term of their employment agreements, benefits comparable to the
benefits that they would have received under certain benefit plans maintained by
the Corporation and the Bank and acceleration of all unvested stock options. Mr.
Weagley and Mr. Bennetti would be entitled to comparable benefits if the Bank
and the Corporation were to terminate their employment without cause.

The employment agreements for Messrs. Davis, Weagley and Bennetti
contain "gross up" provisions which provide for additional compensation in the
event that any benefits payable to them pursuant to their employment agreements
are subject to certain excise taxes imposed by the Internal Revenue Code.

<PAGE>

Compensation Committee Interlocks and Insider Participation

The Board of Directors did not maintain a Compensation Committee
during 1998. Accordingly, compensation decisions were made by the entire Board
of Directors. During 1998, the following individuals served on the Board for all
or a portion of the year: Alexander A. Bol, Hugo Barth III, Robert L. Bischoff,
Brenda Curtis, John J. Davis, Donald G. Kein, Paul Lomakin, Jr., Herbert
Schiller, Stanley R. Sommer, William A. Thompson and Charles P. Woodward. Of the
persons named, only Mr. Davis has served as an officer and/or employee of the
Corporation or the Bank. Mr. Davis participates in Board determinations
regarding compensation of all employees other than himself.

Directors Hugo Barth III, Robert L. Bischoff, Alexander A. Bol, Brenda
Curtis, John J. Davis, Donald G. Kein, Paul Lomakin, Jr., Herbert Schiller,
Stanley R. Sommer, William A. Thompson and Charles P. Woodward and certain of
the Corporation's officers and their associates are and have been customers of
the Bank and have had transactions with the Bank in the ordinary course of
business during 1998. All such transactions with these directors and officers of
the Corporation and their associates were made in the ordinary course of
business on substantially the same terms, including interest rates and
collateral, as those prevailing at the time of such transactions for other
persons and did not involve more than a normal risk of collectibility or present
other unfavorable features.

During 1998, a partnership of which Director Donald G. Kein was a
partner rendered legal services to the Corporation and/or the Bank in the normal
course of business. The aggregate fees amounted to approximately $99,524. Such
firm has rendered and will continue to render legal services to the Corporation
and/or the Bank in 1999. The cost of such services was reasonable and comparable
to the cost of obtaining similar services elsewhere in the market place.

For information regarding a trust arrangement entered into with
respect to Mr. Davis, see the "Board Report on Executive Compensation" below.

Board Report on Executive Compensation

Pursuant to rules adopted by the SEC to enhance disclosure of
corporate policies regarding executive compensation, the Corporation has set
forth below a report of its Board regarding compensation policies as they affect
Mr. Davis and the other executive officers of the Corporation.

Overview

The Board of Directors views compensation of executive officers as
having three distinct parts, a current compensation program, a set of standard
benefits and a long-term benefit. The current compensation element focuses upon
the executive officer's salary and is designed to provide appropriate
reimbursement for services rendered. Historically, the Corporation's standard
benefit package was limited to the Pension Plan and health insurance. In 1995,
the Board provided for these benefits to be supplemented in certain

<PAGE>

circumstances. The long-term benefit element has primarily been reflected in the
grants of stock options to specific executive officers.

The employment agreement entered into with John J. Davis has enabled
the Board to tie annual compensation to Mr. Davis' and the Corporation's
performance. Initially, the agreement provided for a base salary of $130,000 per
annum. Base salary in subsequent years has been left to the discretion of the
Board of Directors, subject to the restriction that base salary may not be
reduced during the term of the agreement. In subsequent years, Mr. Davis' salary
has been increased to $235,000 per year. Subject to contractual minimums in the
case of those executives (such as Mr. Weagley and Mr. Bennetti) who have entered
into employment agreements with the Corporation, the salary levels of the other
executive officers are set annually by the Board of Directors, with a
recommendation by Mr. Davis.

The Board has concluded that it is important to provide Mr. Davis, Mr.
Weagley, Mr. Bennetti and certain other executives with employment protections.
Mr. Davis' employment agreement contains an "evergreen" clause which, in effect,
assures him that he will receive three years notice of any decision to terminate
his agreement. Mr. Weagley's agreement assures Mr. Weagley, and Mr. Bennetti's
employment agreement assures Mr. Bennetti, that he will receive two years notice
of any decision to terminate his agreement.

Specific Elements of Compensation

The Board has sought to structure executive compensation as a
"pay-for-performance" compensation policy. The elements of that policy are as
follows:

(a) Salary. While consolidation within the banking industry has
created a substantial supply of qualified executives, the Board believes that it
is important for the Bank to retain a competitive salary structure. In late
1994, the Board approved new salary guidelines for the Bank's officers. In
accordance with those guidelines, Mr. Davis' current salary of $235,000 was
increased to that level in January 1999.

(b) Incentive Compensation. The AIP is designed to correlate
compensation to performance in a manner designed to provide meaningful
incentives for Bank officers in general. Under the terms of the AIP, Bank
officers were eligible to receive incentive pay for performance in 1998. For Mr.
Davis, performance goals relate solely to the performance of the Corporation.
For all other participants, goals relate both to individual performance and the
Corporation's performance.

(c) Benefit Plans. In addition to benefits provided under the Pension
Plan and under standard medical insurance plans, the Corporation furnishes the
following plan benefits to executive officers:

(i) 401(k). The Corporation has implemented a company-wide 401(k)
plan designed to provide an overall benefit to all full-time employees who are
at least 21 years old and have at least one year of service. Under this Plan,

<PAGE>

the Corporation matches 50% of employee contributions up to 6% of gross
compensation. The match for Mr. Davis during 1998 was $6,300.

(ii) SERPs. The Corporation has established two Supplemental
Executive Retirement Plans ("SERPs") designed to provide benefits lost to senior
management as a result of federal legislation reducing and/or limiting
retirement benefits available from the Corporation's Pension Plan and 401(k)
plan. Costs to the Corporation for the replacement benefits are similar to the
reduction in qualified retirement plan costs which otherwise would be provided
by those plans but for the federal legislation. To date, Mr. Davis is the only
employee designated for participation in the SERPs. To set aside funds to help
meet its obligations under the SERPs, the Bank established a trust as of July 1,
1997 (the "Trust"). The Bank expects to contribute funds to the Trust from time
to time. The Trust funds, which are subject to the claims of the Bank's
creditors in certain circumstances, will be held in the Trust until paid to plan
participants and their beneficiaries in accordance with the terms of the SERPs.

(iii) Split Dollar Life Insurance. The Board has implemented a
split dollar life insurance program for Mr. Davis and other senior bank officers
under the age of 60. This plan is designed to reduce the costs to the
Corporation of providing death benefit coverage to such officers, while
providing enhanced benefits at retirement (projected to be 3.5 times salary less
$50,000 remaining in a group term plan) and reduced income tax to the
participants on the coverage provided.

(d) Stock Options. From time to time, the Board has granted stock
options to Mr. Davis and other executive officers. Such options have been
granted at an exercise price equal to the then current market price of the
Common Stock. The value of such options thus correlates directly with the market
performance of the Common Stock. Information regarding Mr. Davis', Mr. Weagley's
and Mr. Bennetti's options is presented elsewhere herein.

The Board has proposed that the Corporation's stockholders adopt a new
stock incentive plan, as described in "Proposal Two" below. The Board's
rationale for proposing this new plan is described in "Proposal Two" below as
well.

The Board believes that an appropriate compensation program can help
in achieving shareholder performance goals if its program reflects an
appropriate balance between providing rewards to key employees while at the same
time effectively controlling cash compensation costs. The Board believes that
its compensation program is consistent with, and should help to achieve, those
objectives.

By: The Board of Directors

Hugo Barth III Donald. G. Kein Stanley R. Sommer
Robert L. Bischoff John J. Davis William A. Thompson
Alexander A. Bol Paul Lomakin, Jr. Charles P. Woodward
Brenda Curtis Herbert Schiller

<PAGE>

Stockholder Return Comparison

Set forth below is a line graph presentation comparing the cumulative
stockholder return on the Corporation's Common Stock, on a dividend reinvested
basis, against the cumulative total returns of the Standard & Poor's 500 Stock
Index and the Media General Industry Group Index-Middle-Atlantic Banks for the
period from January 1, 1994 through December 31, 1998.

COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN
AMONG CENTER BANCORP, INC.,
THE S&P 500 INDEX AND THE MEDIA GENERAL INDUSTRY GROUP INDEX

Measurement Period (Fiscal Year Ending
December 31)
1994 1995 1996 1997 1998

<S> <C> <C> <C> <C> <C>
Center Bancorp, Inc. 88.49 92.45 97.39 119.47 134.67

Media General Industry
Group Index - Middle
Atlantic Banks 99.03 145.75 194.71 317.56 349.55

S&P 500 Index 101.32 139.40 171.41 228.59 293.92

</TABLE>

ASSUMES $100 INVESTED ON JANUARY 1, 1994

<PAGE>

PROPOSAL TWO - 1999 STOCK INCENTIVE PLAN

PROPOSAL TO APPROVE THE
1999 EMPLOYEE STOCK INCENTIVE PLAN

General

On October 8, 1998, the Board of Directors of the Company adopted the
Center Bancorp Inc. 1999 Employee Stock Incentive Plan (the "1999 Plan"),
subject to approval by the Company's shareholders at the Annual Meeting. The
Board recommends that shareholders of the Company approve the 1999 Plan. The
Board believes that the 1999 Plan will attract qualified employees and encourage
existing employees to acquire a proprietary interest in the Company, to continue
their employment with the Company and its subsidiaries and to render superior
performance during their period of employment. In addition, the Board adopted
the 1999 Plan because the number of shares of the Company's Common Stock, no par
value ("Shares"), remaining available for option grants under the Center Bancorp
Inc. 1993 Employee Stock Option Plan (the "1993 Plan") was deemed to be
inadequate. The number of Shares available for future grants under the 1993 Plan
as of February 26, 1999 was 225,735 Shares, representing less than 6.3% of all
outstanding Shares. The 1999 Plan is designed to enable the Company to grant
stock options ("Options") and restricted stock awards ("Restricted Stock
Awards") (collectively, "Incentives") to employees of the Company and its
subsidiaries.

The following is a summary of certain terms of the 1999 Plan, the full
text of which is available to shareholders upon written request made to the
Chief Financial Officer of the Company at its corporate headquarters. Although
the principal features of the 1999 Plan are summarized below, the following is
only a summary and is qualified in its entirety by reference to the complete
text of the 1999 Plan. Capitalized terms not otherwise defined herein have the
meanings ascribed to them in the 1999 Plan.

Shares Issuable Under the 1999 Plan

An aggregate of 179,000 shares of the Company's Common Stock are
authorized for issuance under the 1999 Plan, which amount will be
proportionately adjusted in the event of certain changes in the Company's
capitalization, a merger, or a similar transaction. Such shares may be treasury
shares or newly issued shares or a combination thereof. If any Options granted
under the 1999 Plan expire or terminate for any reason before they have been
exercised, or any Restricted Stock Awards are forfeited, the Shares subject to
those Options or Awards will again be available for issuance under the 1999
Plan. The number of Shares available for Incentives and the number of Shares
covered by outstanding Incentives under the 1999 Plan will be adjusted equitably
for any stock splits, stock dividends, recapitalizations, mergers and other
similar changes in the Company's capital stock. Comparable changes will be made
in the exercise price or base price of outstanding Incentives.

<PAGE>

Administration

The 1999 Plan will be administered by a committee (the "Committee"),
appointed by the Board of Directors of the Company (the "Board"), consisting
solely of two or more members of the Board who are "outside directors" as
defined in regulations of the Internal Revenue Service promulgated under Section
162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The
Committee will have full authority to (i) administer the 1999 Plan, (ii)
determine the eligible individuals who will receive Incentives, (iii) set the
terms, conditions and restrictions of Incentives, (iv) prescribe the form of
agreements pertaining to Incentives, (v) interpret the 1999 Plan, (vi) establish
rules and regulations relating to the 1999 Plan and its functions thereunder,
and (vii) accelerate the date on which any previously granted Incentives may
vest or become exercisable.

Eligibility

All employees of the Company and its subsidiaries are eligible for
selection by the Committee to participate in the 1999 Plan. Non-employee
directors and non-employee officers are not eligible to receive any benefits
under the 1999 Plan. The Company has not yet determined the number of executive
officers or employees who may be granted Incentives under the 1999 Plan.

Terms and Conditions of Options

Types of Stock Options.

An award of Options may consist of either Nonqualified Options or
Incentive Options. Incentive Options are designed to qualify as "incentive stock
options" within the meaning of Section 422 of the Code. The determination of
whether a particular Option granted under the 1999 Plan will be an Incentive
Option or a Nonqualified Option will be made by the Committee at the time of
grant. The maximum number of Shares covered by Options which may be granted
under the 1999 Plan to any one participant in any one calendar year is 100,000
Shares.

Exercise Price

An Option entitles the participant to acquire a specified number of
Shares at a predetermined exercise price. The exercise price of an Incentive
Option cannot be less than the "fair market value" of a Share on the date of
grant. However, Incentive Options granted to a person who owns more than 10% of
the combined voting power of all classes of the Company's capital stock on the
date of grant (a "Ten Percent Shareholder") cannot be issued at an exercise
price of less than 110% of "fair market value". Under the 1999 Plan, the
exercise price of a Nonqualified Option will be equal to the "fair market value"
of a Share on the date of grant.

For purposes of the 1999 Plan, the term "fair market value" means,
generally, the average of (i) the highest sale price of Shares as reported on
the "Applicable Market" on the valuation date, and (ii) the lowest sale price of
Shares as reported on the "Applicable Market" on the valuation date. The

<PAGE>

"Applicable Market" means the National Market System of Nasdaq. If, however,
Shares are instead traded on a national securities exchange, the "Applicable
Market" will mean such national securities exchange. If Shares are not publicly
traded an any "Applicable Market" on the applicable valuation date, "fair market
value" will be determined by the Committee. All references in this summary
description of the 1999 Plan to the term "fair market value" contemplate this
definition of fair market value.

Payment

The exercise price of an Option is payable in full at the time of
exercise. Payment is to be made (i) in cash or by check, (ii) if permitted by
the Committee, by a tender of Shares having a "fair market value" on the date of
exercise equal to the exercise price of the Option, or (iii) if permitted by the
Committee, a combination of (i) and (ii). In addition, the Committee may
authorize a "cashless exercise" procedure that affords participants the
opportunity to sell immediately some or all of the Shares underlying the
exercised portion of an Option in order to generate sufficient cash to pay the
exercise price and/or to satisfy withholding tax obligations related to the
Option.

Term

No Option may be granted under the 1999 Plan after April 13, 2009.
Furthermore, no Options may be exercised more than ten years after the date of
grant. In addition, an Incentive Option granted to a Ten Percent Shareholder
will expire no later than five years after the date such Option is granted.

Vesting

Options will become exercisable at such time or times and in such
number during its term as the Committee shall determine at the time of grant.
However, if the Company should adopt a plan of reorganization pursuant to which
(i) it will merge into, consolidate with, or sell substantially all of its
assets to, any other entity, or (ii) any other entity will merge into the
Company in a transaction in which the Company will become a wholly-owned
subsidiary of another entity, or if the Company should adopt a plan of
liquidation, all Options will thereupon become fully exercisable and the Company
may require in such event (w) that such Options be exercised within thirty days,
(x) if the event is a merger or consolidation in which shareholders of the
Company receive shares of another corporation, that option holders (hereafter
referred to as "Optionees") agree to convert their Options into comparable
options to acquire such shares, or (y) if the event is a merger or consolidation
in which shareholders of the Company receive cash or other property, that
Optionees agree to convert their Options into such consideration, or (z) that
Options be surrendered.

The aggregate fair market value of an Optionee's Incentive Options
that first become exercisable in any one calendar year (under the 1999 Plan and
any other Company plan) cannot exceed $100,000.

Upon termination of an Optionee's employment or association with the
Company for any reason before an Option has vested in full, then the unvested

<PAGE>

portion of the Options will automatically terminate. After the date on which an
Option vests, if the Optionee's employment or association with the Company is
terminated for any reason, the Option shall be exercisable for the lesser of (i)
three months from the date of such termination, or (ii) the balance of such
Option's term; except that if the Optionee terminated employment with the
Company due to death or disability, the Option may be exercised by the Optionee,
or, in the case of the Optionee's death, his heirs, legatees or personal
representatives, within a period equal to the lesser of twelve months after the
date of such termination or the termination date of the Option.

Restricted Stock Awards

The 1999 Plan authorizes the Committee to grant Restricted Stock
Awards. A Restricted Stock Award is an award of Shares that is accompanied by
restrictions which may relate to continuing employment with the Company,
performance or such other factors as the Committee may determine at the time of
grant. The Committee will also determine the price, if any, which a participant
must pay (in cash or, at the discretion of the Committee, in Shares or a
combination of cash and Shares) in order to receive the Shares covered by the
Restricted Stock Award. Shares issued pursuant to a Restricted Stock Award will
be held by the Company pending the satisfaction of all restrictions. Recipients
of Restricted Stock Awards are entitled to exercise voting rights and receive
dividends, if any, with respect to the Shares that are the subject of such
Restricted Stock Awards.

Assignment

Incentive Options granted under the 1999 Plan generally are not
assignable or transferable other than by will or the laws of descent and
distribution. With the consent of the Committee, other Incentives may be
transferred by a participant to his or her immediate family members or to trusts
established exclusively for the benefit of such family members. In the event of
any such transfer, termination and forfeiture provisions will continue to be
based upon the employment of the participant who was initially granted the
Incentive under the 1999 Plan.

Termination, Amendment and Modification

The Board may amend, suspend or terminate the 1999 Plan at any time as
it deems advisable, except that no such amendment, suspension or termination may
adversely affect a participant's rights with respect to previously granted
Incentives without his or her consent.

Federal Income Tax Consequences

BECAUSE OF THE COMPLEXITY OF THE FEDERAL INCOME TAX LAWS AND THE
APPLICATION OF VARIOUS STATE INCOME TAX LAWS, THE FOLLOWING DISCUSSION OF TAX
CONSEQUENCES IS GENERAL IN NATURE AND RELATES SOLELY TO FEDERAL INCOME TAX
MATTERS. PARTICIPANTS IN THE 1999 PLAN ARE ADVISED TO CONSULT THEIR OWN PERSONAL
TAX ADVISORS. IN ADDITION, THE FOLLOWING SUMMARY IS BASED UPON AN ANALYSIS OF
THE INTERNAL REVENUE CODE AS CURRENTLY IN EFFECT, EXISTING LAWS, JUDICIAL

<PAGE>

DECISIONS, ADMINISTRATIVE RULINGS, REGULATIONS AND PROPOSED REGULATIONS, ALL OF
WHICH ARE SUBJECT TO CHANGE.

Nonqualified Options. The grant of a Nonqualified Option will not
result in the recognition of taxable income by the participant or in a deduction
to the Company. Upon exercise, a participant will recognize ordinary income in
an amount equal to the excess of the fair market value of the Shares purchased
over the exercise price. The Company is required to withhold tax on the amount
of income so recognized, and a tax deduction is allowable equal to the amount of
such income (subject to the satisfaction of certain conditions under Section
162(m) of the Code; see "Limitations on the Company's Compensation Deduction"
below). Gain or loss upon a subsequent sale of any the Shares received upon the
exercise of a Nonqualified Option generally would be taxed as capital gain or
loss (long-term or short-term, depending upon the holding period of the stock
sold). Certain additional rules apply if the exercise price for an Option is
paid in Shares previously owned by the participant.

Incentive Options. Upon the grant or exercise of an incentive stock
option within the meaning of Section 422 of the Code, no income will be realized
by the participant for federal income tax purposes and the Company will not be
entitled to any deduction. However, the excess of the fair market value of the
Shares received upon, and as of the date, of exercise over the exercise price
will constitute an adjustment to taxable income for purposes of the alternative
minimum tax. If the Shares received upon exercise are not disposed of within the
one-year period beginning on the date of the transfer of such shares to the
participant, nor within the two-year period beginning on the date of grant of
the Option, any profit realized by the participant upon the disposition of such
Shares will be taxed as long-term capital gain and no deduction will be allowed
to the Company. If such Shares are disposed of within the one-year period from
the date of transfer of such Shares to the participant or within the two-year
period from the date of grant of the Option, the excess of the fair market value
of the Shares upon the date of exercise or, if less, the fair market value on
the date of disposition, over the exercise price will be taxable as ordinary
income of the participant at the time of disposition, and a corresponding
deduction will be allowed the Company. Certain additional rules apply if the
exercise price for an Option is paid in Shares previously owned by the
participant. If an Option intended to qualify as an incentive stock option under
Section 422 of the Code is exercised by a person who was not continually
employed by the Company or certain of its affiliates from the date of grant of
such Option to a date not more than three months prior to such exercise (or one
year if such person is disabled), then such Option will not qualify as an
incentive stock option and will instead be taxed as a Nonqualified Option, as
described above.

Restricted Stock Awards. A participant who is awarded a Restricted
Stock Award will not be taxed at the time of award unless the participant makes
a special election with the Internal Revenue Service pursuant to Section 83(b)
of the Code as discussed below. Upon lapse of the risk of forfeiture or
restrictions on transferability applicable to the Shares comprising the
Restricted Stock Award, the participant will be taxed at ordinary income tax
rates on the then fair market value of the Shares and a corresponding deduction
will be allowable (subject to the satisfaction of certain conditions under

<PAGE>

Section 162(m) of the Code). In such case, the participant's basis in the Shares
will be equal to the ordinary income so recognized. Upon subsequent disposition
of such Shares, the participant will realize capital gain or loss (long-term or
short-term, depending upon the holding period of the stock sold).

Pursuant to Section 83(b) of the Code, the participant may elect
within 30 days of receipt of a Restricted Stock Award to be taxed at ordinary
income tax rates on the fair market value of the Shares comprising such
Restricted Stock Award at the time of award (determined without regard to any
restrictions which may lapse). In that case, the participant will acquire a
basis in such Shares equal to the ordinary income recognized by the participant
at the time of award. No tax will be payable upon lapse or release of the
restrictions or at the time the Shares first become transferable, and any gain
or loss upon subsequent disposition will be a capital gain or loss. In the event
of a forfeiture of the Shares with respect to which a participant previously
made a Section 83(b) election, the participant will not be entitled to a loss
deduction.

Persons Subject to Liability Under Section 16(b) of the Exchange Act.
Special rules apply under the Code which may delay the timing and alter the
amount of income recognized with respect to Awards granted to persons subject to
liability under Section 16(b) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"). Such persons include directors, "officers" (as defined
under Section 16 of the Exchange Act) and holders of more than 10% of the
Company's outstanding Shares.

Limitations on the Company's Compensation Deduction. Section 162(m) of
the Code may limit the deductions which the Company may take for otherwise
deductible compensation payable to certain executive officers of the Company to
the extent that such compensation paid to such officers in any year exceeds $1
million, unless such compensation is performance-based, is approved by the
Company's shareholders and meets certain other criteria. While the 1999 Plan has
been designed to permit compliance with Section 162(m), no assurance can be
given that all compensation derived by covered executives from the 1999 Plan
will be exempt under Section 162(m).

The Board of Directors recommends that the shareholders approve Proposal Two.

INDEPENDENT PUBLIC ACCOUNTANTS

The Corporation and the Bank have appointed KPMG their independent
auditors to perform the function of independent public auditors for fiscal year
1999.

Representatives of KPMG are expected to attend the Annual Meeting and
will be available to respond to appropriate questions of shareholders. Such
representatives will have an opportunity to make a statement at the Annual
Meeting if they so desire.

SHAREHOLDER PROPOSALS

SEC regulations permit shareholders to submit proposals for
consideration at annual meetings of shareholders. Any such proposals for the
Corporation's Annual Meeting of Shareholders to be held in 2000 must be
submitted to the Corporation on or before November 12, 1999 and must comply with

<PAGE>

applicable regulations of the SEC in order to be included in proxy materials
relating to that meeting.

OTHER MATTERS

The Board of Directors of the Corporation is not aware that any other
matters are to be presented for action, but if any other matters properly come
before the Annual Meeting, or any adjournments thereof, the holder of any proxy
is authorized to vote thereon at his or her discretion.

A copy of the Annual Report of the Corporation and the Bank for the
year ended December 31, 1998 is being mailed to shareholders with this proxy
statement. The Annual Report is not to be regarded as proxy soliciting material
or as a communication by means of which any solicitation is to be made.

A COPY OF THE CORPORATION'S ANNUAL REPORT ON FORM 10-K FOR THE YEAR
ENDED DECEMBER 31, 1998 (EXCLUDING EXHIBITS) WILL BE FURNISHED, WHEN AVAILABLE,
WITHOUT CHARGE TO ANY SHAREHOLDER MAKING A WRITTEN REQUEST FOR THE SAME TO
ANTHONY C. WEAGLEY, VICE PRESIDENT AND TREASURER, CENTER BANCORP, INC., 2455
MORRIS AVENUE, UNION, NEW JERSEY 07083.

By Order of the Board of Directors

John J. Davis
President and Chief Executive Officer

Dated: March 12, 1999

<PAGE>

APPENDIX

CENTER BANCORP, INC.

1999 STOCK INCENTIVE PLAN

SECTION 1. General Purpose of Plan.

The name of this plan is the Center Bancorp, Inc. 1999 Stock Incentive
Plan (the "Plan"). The purpose of the Plan is to enable Center Bancorp, Inc.
(the "Company") and other members of the Group (as defined below) to retain and
attract executives and other key employees who contribute to the success of the
Company and the Group by their ability and industry, and to enable such
individuals to participate in the long-term success and growth of the Company by
giving them a proprietary interest in the Company.

SECTION 2. Definitions.

As used in this Plan the following terms have the meanings stated. The
singular includes the plural, and the masculine gender includes the feminine and
neuter genders, and vice versa, as the context requires. The word "person"
includes any natural person and any corporation, firm, partnership or other form
of association.

(a) "Award Date" means the date on which an Incentive is awarded as
specified by the Committee.

(b) "Board" means the Board of Directors of the Company.

(d) "Committee" means a committee of two or more members of the Board,
to which the Board has delegated the authority to administer the Plan under
Section 3.

(e) "Common Stock" means the common stock, no par value, of the
Company.

(f) "Company" means Center Bancorp, Inc. and any successor thereto.

(g) "Disability" means a permanent and total disability as defined in
Section 22 of the Code.

(h) "Fair Market Value" has the meaning stated in Section 8.12.

(i) "Group" means the Company, each parent corporation to the Company,
and each of the Company's subsidiaries, as these terms are defined in Sections
424(e) and 424(f) of the Code.

<PAGE>

(j) "Incentive Stock Option" means a stock option intended to qualify
as an incentive stock option under Section 422 of the Code.

(k) "Incentives" mean the economic incentives listed in Section 5.04
that may be awarded under this Plan.

(l) "Non-Employee Director" shall have the meaning set forth in Rule
16b-3(b)(3) as promulgated by the Securities and Exchange Commission under the
Securities Exchange Act of 1934, as amended, or any successor definition adopted
by the Commission.

(m) "Non-Statutory Stock Option" means any Stock Option other than an
Incentive Stock Option.

(n) "Outside Director" means a director who (a) is not a current
employee of the Company or any member of an affiliated group which includes the
Company; (b) is not a former employee of the Company who receives compensation
for prior services (other than benefits under a tax-qualified retirement plan)
during the taxable year; (c) has not been an officer of the Company; (d) does
not receive remuneration from the Company, either directly or indirectly, in any
capacity other than as a director, except as otherwise permitted under Code
Section 162(m) and regulations thereunder. For this purpose remuneration
includes any payment in exchange for goods or services. This definition shall be
further governed by the provisions of Code Section 162(m) and regulations
promulgated thereunder.

(o) "Participant" means an employee or director of any member of the
Group to whom an Incentive has been awarded.

(p) "Plan" means this Center Bancorp, Inc. 1999 Stock Incentive Plan,
as the same may be amended from time to time.

(q) "Qualified Person" means a Participant's legal guardian or legal
representative or a deceased Participant's heir or legatee who has a legal right
to or in respect of an Incentive of that Participant.

(r) "Restricted Stock Award" means an award of Shares by the Company
to the Participant at a price that may be below Fair Market Value, or without
payment to the Company, but which are subject to restrictions on sale and other
transfer and are subject to forfeiture.

(s) "Share" means a share of Common Stock.

(t) "Stock Option" means an Incentive Stock Option or a Non-Statutory
Stock Option.

<PAGE>

SECTION 3. Administration.

3.01. The Committee. The Plan shall be administered by a Committee
consisting of not less than two persons appointed by the Board from among its
members. A person may serve on the Committee only if he or she is a Non-Employee
Director and an Outside Director. Committee members shall serve at the pleasure
of the Board.

The Committee shall have the power and authority to grant to eligible
employees, pursuant to the terms of the Plan, Stock Options and Restricted Stock
Awards.

In particular, the Committee shall have the authority:

(i) to select the officers and other key employees of the Group
to whom Stock Options and/or Restricted Stock Awards may
from time to time be granted hereunder;

(ii) to determine whether and to what extent Incentive Stock
Options, Non-Statutory Stock Options and Restricted Stock
Awards, or a combination of the foregoing, are to be granted
hereunder; and

(iii)to determine the terms and conditions, not inconsistent
with the terms of the Plan, of any award granted hereunder
(including, but not limited to, any restriction on any Stock
Option or Restricted Stock Award and/or the Shares relating
thereto).

The Committee shall have the authority to adopt, alter and repeal such
administrative rules, guidelines and practices governing the Plan as it shall,
from time to time, deem advisable; to interpret the terms and provisions of the
Plan and any award issued under the Plan (and any agreements relating thereto);
and to otherwise supervise the administration of the Plan.

All decisions made by the Committee pursuant to the provisions of the
Plan shall be final and binding on all persons, including the Company and
Participants.

SECTION 4. Eligibility.

4.01. Designation of Employees. All employees of any member of the
Group, including officers and directors who are employees, are eligible to
receive Incentives under the Plan. Directors and officers who are not employees
of any member of the Group may not receive Incentives under the Plan.

4.02. Participants. The Committee may consider any factor in selecting
Participants and in determining the type and amount of their Incentives,
including, but not limited to, (a) the current or anticipated financial
condition of the Group, (b) the contributions by the Participant to the Group

<PAGE>

and (c) the other compensation provided to the Participant. The Committee's
award of an Incentive to a person in any year shall not require the Committee to
award any Incentive to that person in any other year.

SECTION 5. Shares Subject to the Plan.

5.01. Number of Shares. Subject to Section 8.07, the aggregate number
of Shares which may be issued under the Plan shall not exceed 179,000 Shares.

5.02. Expiration and Cancellation. If an Incentive granted under the
Plan expires, is terminated or is otherwise canceled before exercise, that
Incentive and the related shares of Common Stock shall not apply toward the
limits provided in Section 5.01. If Shares issued or awarded under this Plan are
forfeited, canceled, terminated or reacquired by the Company, those forfeited,
canceled, terminated or reacquired Shares shall not apply toward the limits
provided in Section 5.01 and shall be available again for the grant of
Incentives.

5.03. Maintenance of Stock. Shares issued under the Plan shall be
authorized and unissued shares or shares of treasury stock. The Company shall
always maintain the number of such Shares at least equal to a number of Shares
for which Incentives have been granted and remain outstanding and unexercised.

5.04. Types of Incentive. Incentives may be granted in any one or any
combination of the following forms: (a) Non-Statutory Stock Options (Section 6);
(b) Incentive Stock Options (Section 6); and (c) Restricted Stock Awards
(Section 7).

SECTION 6. Stock Options.

Each Stock Option granted under this Plan shall be subject to the
following terms and conditions:

6.01. Price. The option price per share shall be determined by the
Committee; provided, however, that the option price shall not be less than the
Fair Market Value on the Award Date of the Common Stock subject to the Stock
Option.

6.02. Number. The number of Shares subject to the Stock Option shall
be determined by the Committee.

6.03. Duration and time for exercise. The Award Date of a Stock Option
shall be the date specified by the Committee, provided that such date shall not
be before the date on which the Stock Option is actually awarded. The term of
each Stock Option shall be determined by the Committee but shall not exceed ten
(10) years from the date of grant. Each Stock Option shall become exercisable at
such time or times and in such amount or amounts during its term as shall be
determined by the Committee at the time of grant. The Committee may accelerate
the exercisability of any Stock Option. Unless otherwise specified by the

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Committee, once a Stock Option becomes exercisable, whether in full or in part,
it shall remain so exercisable until its expiration, forfeiture, termination or
cancellation.

6.04. Exercise. A Stock Option may be exercised, in whole or in part,
by giving written notice to the Company (Attention: Chief Financial Officer) at
its principal office or to such transfer agent as the Company may designate. The
notice shall identify the Incentive being exercised and shall contain such other
information and terms as the Committee may require. The notice shall be
accompanied by full payment of the purchase price for the Shares (a) in United
States dollars in cash or by check, (b) at the discretion of the Committee, by
delivery of previously acquired Shares having a Fair Market Value equal on the
date of exercise to the cash exercise price of the Stock Option, or (c) at the
discretion of the Committee, by a combination of (a) and (b) above. As soon as
practicable after receipt of the written notice, the Company shall deliver to
the person exercising the Stock Option one or more certificates for the Shares.

6.05. Incentive Stock Options. Notwithstanding anything in this Plan
to the contrary, the following additional provisions shall apply to the grant of
Incentive Stock Options:

(a) The aggregate Fair Market Value on the Award Date of the Shares
with respect to which Incentive Stock Options are exercisable for the first time
by any Participant during any calendar year (under all plans of the Group) shall
not exceed $100,000;

(b) All Incentive Stock Options must be granted within ten (10) years
from the date on which the Plan was adopted by the Board;

(c) Unless exercised sooner, each Incentive Stock Option shall expire
no later than ten (10) years after the Award Date for that Incentive Stock
Option;

(d) No Incentive Stock Option shall be granted to any Participant who,
at the time that option is granted, owns (within the meaning of Section 422 of
the Code) stock having more than 10% of the total combined voting power of all
classes of stock of the Company or any member of the Group, unless the option
price is equal to at least 110% of the Fair Market Value of the Shares subject
to the option on the Award Date and the option is not exercisable later than
five years from the Award Date;

(e) Each Incentive Stock Option agreement referred to in Section 8.05
shall contain or be deemed to contain all provisions required in order to
qualify those Stock Options as incentive stock options under Section 422 of the
Code, and the provisions of this Plan shall be interpreted and construed to
effect such treatment under that Section.

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SECTION 7. Restricted Stock Awards.

Restricted Stock Awards shall be subject to the following terms and
conditions:

7.01. Number of Shares. The number of Shares to be issued by the
Company to a Participant under a Restricted Stock Award shall be determined by
the Committee.

7.02. Sale Price. The Committee shall determine the prices, if any, at
which Shares issued under a Restricted Stock Award shall be sold to a
Participant, which prices may vary from time to time and among Participants and
which may be below the Fair Market Value of Shares at the date of sale. The
Shares of restricted stock awarded at a price must be paid for (a) in United
States Dollars in cash or by check, (b) at the discretion of the Committee, by
delivery of Shares having a Fair Market Value equal on the purchase date to the
purchase price or (c) at the discretion of the Committee, by a combination of
(a) and (b) above.

7.03. Restrictions. All Shares issued under a Restricted Stock Award
shall be subject to such restrictions as the Committee may determine, which may
include, but not be limited to, any or all of the following:

(a) a prohibition against the sale, transfer, pledge, encumbrance or
other disposition of the Shares. Such a prohibition shall lapse at the time or
times that the Committee may determine (whether, for example, in annual or more
frequent installments, at the time of the death, disability or retirement of the
Participant, or otherwise); and

(b) a requirement that the Participant forfeit all or any part of
those Shares if the Participant's employment is terminated during any period in
which those Shares are subject to restrictions or if the Participant fails to
satisfy performance criteria approved by the Committee.

7.04. Certificates. Shares issued under a Restricted Stock Award shall
be registered in the name of the Participant and held in the custody of the
Company until the restrictions thereon lapse. Each certificate for those Shares
shall bear a legend in substantially the following form:

"The transfer of this certificate and the shares of Common Stock
represented by it is subject to the terms and conditions
(including conditions of forfeiture) contained in the Center
Bancorp, Inc. 1999 Stock Incentive Plan (the "Plan") and an
agreement entered into between the registered owner and Center
Bancorp, Inc. (the "Company"). Copies of the Plan and agreement
are on file in the office of the Secretary of the Company."

7.05. End of Restrictions. After the restrictions have expired,
certificates evidencing the Shares shall be delivered to the Participant free of
the legend. The Shares, however, shall remain subject to any other restrictions
stated in this Plan or in the agreement providing for that Incentive.

<PAGE>

7.06. Stockholder Rights. Subject to the terms and conditions of the
Plan and any other restrictions determined by the Board and set forth in the
agreement for the Restricted Stock Award, each Participant who receives Shares
under a Restricted Stock Award shall have all of the rights of a stockholder
during any period in which the Shares are subject to restrictions, including,
but not limited to, the right to vote the Shares. Dividends on the Shares paid
in cash or property shall be paid to the Participant. Dividends payable in
Shares or other stock, however, shall be paid in restricted Shares subject to
all provisions of this Section 7.

SECTION 8. General.

8.01. Effective date. This Plan shall be effective as of the date of
its approval by the shareholders of the Company. If shareholder approval is not
obtained within one year following the date the Plan is adopted by the Board,
the Plan and any Incentives awarded thereunder shall be void ab initio.

8.02. Duration. Unless the Plan is terminated earlier, the Plan shall
terminate ten (10) years from the date on which the Plan is approved by
shareholders of the Company. No Incentive or other rights under the Plan shall
be granted thereafter. The Board, without further approval of the Company's
stockholders, may at any time before that date terminate the Plan. After
termination of the Plan, no further Incentives may be granted under the Plan.
Stock Options granted before any such termination shall continue to be
exercisable in accordance with the terms of the Option. Restricted Stock Awards
granted before any such termination shall continue to vest in accordance with
the terms of the Award.

8.03. Non-transferability of Incentives; Exercise by Participant. No
Incentive may be sold, pledged, assigned, encumbered, disposed of or otherwise
transferred other than by will or the laws of descent and distribution. The
Company shall not be required to recognize any attempted disposition by any
Participant or Qualified Person. During a Participant's lifetime, such
Participant's Stock Options are only exercisable by such Participant.

8.04. Effects of Death, Disability, Termination of Employment.
Notwithstanding any provision to the contrary herein or in any Incentive
Agreement, the following provisions shall apply with respect to Stock Options
held by a Participant at the termination of such Participant's employment with
members of the Group in the event that such Participant's employment terminates
as a result of death or Disability:

(a) If such employment terminates as a result of death, the
Participant's estate shall have the right to exercise the
Participant's Stock Options for a period ending on the earlier of
the expiration dates of such Stock Options or one year from the
date of termination of employment, provided that such Stock
Options shall be exercisable by such estate only to the extent
exercisable on the date of termination of employment.

(b) If such employment terminates as a result of Disability, the
Participant shall have the right to exercise his Stock Options
for a period ending on the earlier of the expiration dates of

<PAGE>

such Stock Options or one year from the date that the Participant
is notified that he will no longer be employed by any member of
the Group (the "Notification Date"), provided that such Stock
Options shall be exercisable by the Participant after termination
of employment only to the extent exercisable on the Notification
Date.

(c) If such employment terminates for any reason other than death
or Disability, the Participant shall have the right to exercise
his Stock Options for a period ending on the earlier of the
expiration dates of such Stock Options or ninety days from the
date of termination of employment, provided that such Stock
Options shall be exercisable by the Participant after termination
of employment only to the extent exercisable on the date of
termination of employment.

8.05. Incentive Agreements. The terms of each Incentive shall be
stated in an agreement between the Company and the Participant in a form
approved by the Committee. The Participant must execute and deliver the
agreement to the Company as a condition to the effectiveness of the Incentive.
All such agreements may contain all terms and conditions as the Committee
considers advisable that are not inconsistent with the Plan, including, but not
limited to, transfer restrictions, rights of first refusal, forfeiture
provisions, representations and warranties of the Participant and provisions to
ensure compliance with all applicable laws, regulations and rules as provided in
Section 8.06.

8.06. Compliance with Law. The Company may determine, in its sole
discretion, that it is necessary or desirable to list, register or qualify (or
to update any listing, registration or qualification of) any Incentive or the
Shares issuable or issued under any Incentive or this Plan on any securities
exchange or under any federal or state securities law, or to obtain consent or
approval of any governmental body as a condition of, or in connection with, the
award of any Incentive, the issuance of Shares under any Incentive or this Plan,
or the removal of any restrictions imposed on such Shares. If the Company makes
such a determination, the Incentive shall not be awarded or the Shares shall not
be issued or the restrictions shall not be removed, as applicable, in whole or
in part, unless and until the listing, registration, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Company. The Company's obligation to sell or issue Shares
under an Incentive is subject to compliance with all applicable laws and
regulations. The Committee, in its sole discretion, shall determine whether the
sale and issue of Shares is in compliance with all applicable laws and
regulations.

8.07. Adjustment. If the outstanding Shares of Common Stock are
increased or decreased or changed into or exchanged for a different number or
kind of securities of the Company or of another corporation, by reason of
reorganization, merger, consolidation, recapitalization, reclassification, stock
split, combination of securities or dividend payable in corporate securities,
then an appropriate adjustment shall be made by the Board in the number, kind
and/or price of Shares for which Incentives may be granted under the Plan. In
addition, the Board shall make appropriate adjustment in the number, kind and/or
price of Shares as to which outstanding Incentives, or portions thereof then
unexercised, shall be exercisable. In the event of any such adjustment, the

<PAGE>

exercise price of any Stock Option, the performance objectives, restrictions or
other terms and conditions of any Incentive and the Shares issuable under any
Incentive shall be adjusted as and to the extent appropriate, in the sole and
absolute discretion of the Board, to provide each Participant with substantially
the same relative rights before and after such adjustment to the extent
practical.

8.08. Withholding.

(a) The Company shall have the right to withhold from any payments
made under the Plan or to collect as a condition to any award, payment or
issuance of Shares under the Plan any taxes required to be withheld by Federal,
state or local law. Whenever a Participant is required to pay to the Company an
amount required to be withheld under applicable tax laws in connection with a
distribution of Shares or upon exercise of a Stock Option, the Participant may
satisfy this obligation in whole or in part by electing (the "Election") to have
the Company withhold from the distribution that number of Shares having a value
equal to the amount required to be withheld. The value of the Shares to be
withheld shall be based on the Fair Market Value of the Shares on the date on
which the amount of tax to be withheld is determined ("Tax Date").

(b) Each Election must be made before the Tax Date. The Committee may
disapprove any Election, may suspend or terminate the right to make Elections,
or may provide with respect to any Incentive that the right to make an Election
shall not apply to that Incentive. An Election is irrevocable.

8.09. No Right to Continued Employment. No Participant under the Plan
shall have any right to continue in the employ of the Company or any member of
the Group for any period of time because of his or her participation in the
Plan.

8.10. No Right as Stockholder. No Participant or Qualified Person
shall have the rights of a stockholder with respect to the Shares covered by an
Incentive unless a stock certificate is issued to that person for the Shares. No
adjustment shall be made for cash dividends or similar rights for which the
record date is before the date on which such stock certificate is issued.

8.11. Amendment of the Plan. The Board may amend the Plan from time to
time in such respects as the Board deems advisable. No such amendment, however,
shall (a) change or impair an Incentive without the consent of the Participant
or Qualified Person holding that Incentive, or (b) without the prior approval of
the Company stockholders (i) increase the limits provided in Section 5.01
(except by adjustment under Section 8.07), (ii) change the class of persons
eligible to receive Incentives under the Plan, or (iii) make any other change
that requires approval of the Company stockholders under applicable law or to
preserve the treatment of the Incentive Stock Options as such under Section 422
of the Code.

8.12. Definition of Fair Market Value. Whenever "Fair Market Value" of
Common Stock is to be determined for purposes of this Plan, it shall be
determined as follows:

<PAGE>

(a) If the Common Stock is publicly traded at the time Fair Market
Value is to be determined under the Plan, "Fair Market Value" shall mean the
average of the highest and lowest sales prices on the date of determination on
the over-the-counter market as reported by NASDAQ or, if the Common Stock is
then traded on a national securities exchange, the average of the highest and
lowest sales prices on that date on the principal national securities exchange
on which it is so traded; or

(b) If the Common Stock is not publicly traded at the time Fair Market
Value is to be determined under the Plan, "Fair Market Value" shall be
determined in good faith from time to time by the Committee.

8.13. Acceleration; Exercise. Notwithstanding anything to the contrary
set forth in the Plan, in the event that (x) the Company should adopt a plan of
reorganization pursuant to which (i) it shall merge into, consolidate with, or
sell substantially all of its assets to, any other corporation or entity or (ii)
any other corporation or entity shall merge into the Company in a transaction in
which the Company shall become a wholly-owned subsidiary of another entity, or
(y) the Company should adopt a plan of complete liquidation, then (I) all Stock
Options granted hereunder shall be fully exercisable upon consummation of such
event and (II) the Company may give a Participant written notice thereof
requiring such Participant either (a) to exercise his or her Stock Options
within thirty days after receipt of such notice, including all installments
whether or not they would otherwise be exercisable at that date, (b) in the
event of a merger or consolidation in which shareholders of the Company will
receive shares of another corporation, to agree to convert his or her Stock
Options into comparable options to acquire such shares, (c) in the event of a
merger or consolidation in which shareholders of the Company will receive cash
or other property (other than capital stock), to agree to convert his or her
Stock Options into such consideration (in an amount representing the
appreciation over the exercise price of such Stock Options) or (d) to surrender
such Stock Options or any unexercised portion thereof.

8.14 Investment Letter. If required by the Committee, each Participant
shall agree to execute a statement directed to the Company, upon each and every
exercise by such Participant of any Stock Options, that shares issued thereby
are being acquired for investment purposes only and not with a view to the
distribution thereof, and containing an agreement that such shares will not be
sold or transferred unless either (1) registered under the Securities Act of
1933 and all applicable state securities laws, or (2) exempt from such
registration in the opinion of Company counsel. If required by the Committee,
certificates representing shares of Common Stock issued upon exercise of Stock
Options shall bear a restrictive legend summarizing the restrictions on
transferability applicable thereto.

8.15. Fractional and Minimum Shares. In no event shall a fraction of a
Share be purchased or issued under the Plan without Board approval. The
Committee may specify a minimum number of Shares for which each Stock Option
must be exercised.

8.16. Application of Funds. The proceeds received by the Company from
the sale of Shares under the Plan shall be used for general corporate purposes.

<PAGE>

8.17. Other Incentives and Plans. Nothing in this Plan shall prohibit
any member of the Group from establishing other employee incentives and plans.

8.18. Governing Law. The validity and construction of the Plan and of
each agreement evidencing Incentives shall be governed by the laws of the State
of New Jersey, excluding the conflict-of-laws principles thereof.